Measuring the economy’s performance, particularly gross domestic product (GDP), is critical to African governments and the donors that provide them with financial aid. Jerven shows that econometric models used to inform critical decisions about African countries are based on irreconcilably faulty data.

The impact of geography is profound, benefitting some countries, handicapping others. To understand global issues, we must first look at a map. That’s the theme of Robert D. Kaplan’s new book, The Revenge of Geography: What the Map Tells Us About Coming Conflicts and the Battle Against Fate.

Kaplan spins the globe explaining how mountains, rivers and coastlines shaped social and political history. The veteran foreign correspondent knows the terrain well having reported from ramshackle towns and backwater villages in conflict zones for nearly three decades.

His approach to understanding the landscape is based on the premise that “a good place to understand the present, and to ask questions about the future, is on the ground, traveling as slowly as possible”.

At his day job, he places bets on potential winners – a task that was easier in the past than it will be in the future based on his outlook. Traveling regularly to the countries he analyzes, Sharma brings a valuable, on-the-ground view to his work.

Thoughtfully composed, Break Out Nations takes readers on contrarian’s tour of the world where macro forces lift some economies while hindering others.

Global businesses faced unprecedented opportunities and challenges in 2011. In a year that ushered in the Arab uprisings and a fracturing of the Eurozone, the world grew more interdependent and fragile.

Yet markets are demonstrating surprising capacities for resilience. Engineers and entrepreneurs in places like Nairobi, São Paulo and Doha are beginning to build export-worthy technologies.

This is a momentous time for anyone engaged in cross-market projects. It’s only fitting that the year’s top books match the scale of the changes we’re witnessing.

This is a year-end roundup of books that define our times and guide practitioners with a global perspective.

Here are my Summer Reading picks for those who go for both engaging narrative and penetrating insight. I’m recommending two distinctly different books by writers who don’t want to merely inform their readers; they want to shape the conversation. Both authors accomplished what they set out to do.

Tim Harford | Adapt – Why Success Always Starts with Failure

“Today’s challenges simply cannot be tackled with ready-made solutions and expert opinions; the world has become far too unpredictable and profoundly complex. Instead, we must adapt—improvise rather than plan, work from the bottom up rather than the top down, and take baby steps rather than great leaps forward.” ~Tim Harford

If you’re absorbed by events in the Middle East and crave more information about the the region, here are three highly readable, essential books. Each provides a comprehensive view of a surprisingly diverse and increasingly dynamic part of the world.

The Middle East (1997) – Author Bernard Lewis is the senior dean of Middle East scholars. He’s a gifted storyteller with unparalleled subject mastery – a rare combination. Lewis makes clear sense out of complexity. This engaging primer is the gold standard of books on the region.

Schwartz, who led scenario planning efforts at Shell, Motorola, and Pacific Gas and Electric, concluded that the technique could be applied to handling the emergent complex threats that companies were confronting in the 90’s.

Since then, the world has grown radically more complex, more uncertain. Globalization and the Internet have woven together our institutions so that a crisis in one corner of the world can spread virally with far-reaching consequences.

Several years ago, I discovered Laurence Gonzalez’s (’03) book, Deep Survival – Who Lives, Who Dies and Why about individuals surviving “do or die” situations. Recently, I glanced through it again thinking it might be helpful for business people grappling with the challenges of this economy. I couldn’t put it down. Now, I’m convinced of its value for anyone going through any kind of crisis.

Gonzalez studied hundreds of survival stories and presents many of them in his book. He shares tales of people surviving harrowing crashes and others lost in the wilderness. Fascinated by their travails, he ponders why some people make it, while others perish? What general lessons can we learn from how the survivors behaved?

Gonzalez finds that one of the key features “deep survivors” possess is the capacity to focus on “doing the next right thing”. Instead of becoming overwrought, survivors accept what’s happening earlier in the process and focus on extricating themselves. They reason, “Okay, I’m here. This is really happening. Now I’m going to do the next right thing…”

I recognize the value of mindfulness and have meditated intermittently since my college days. But often, I’ve placed my desire to succeed in the corporate world ahead of other interests. This book, by Michael Carroll, is a reminder to integrate mindfulness into all aspects of one’s life, including work.

You never know with these things when you’re trying something new what can happen. This is all experimental. ~Richard Branson

Over the years, there have been surprisingly few breakthroughs in the airline customer experience – until recently. Sir Richard Branson’s venture into the U.S. market, Virgin America, (VX) is redefining air travel by providing passengers with a fresh, distinctive on-board experience. The carrier is less than two years old but it’s quickly becoming a template for what’s possible in the future.

The choices VX is making demonstrate a “customer experience mindset” that’s all too rare in the industry. It’s evident that the VX team devoted their attention to passenger comfort and convenience. Features “baked in” to the customer experience include seats with power-outlets and USB ports. Cabins in their new A320s have soft mood lighting.

It is with the heart that one sees rightly; what is essential is invisible to the eye. ~Antoine De Saint-Exupery, The Little Prince

Business stories about “empathy” are springing up again. BusinessWeek ran one (Empathy = Growth) last week. Fast Company covers the subject periodically. Authors are urging readers to consider the merits of empathy despite the need to cut operating costs as demand for services declines. It makes sense for businesses to re-evaluate their customer relationships in this environment. I think empathy remains widely misunderstood and its role is undervalued in the business community.

Simply put, empathy is rooted in the capacity to see the world through the eyes of another person. Empathy enables a provider of service to recognize the buyer’s feelings, needs, and wants in order to fulfill these drivers through various means.

I’m interested in a broad spectrum of “relational competencies,” including empathy, and how they are used in business. Skillful practitioners use these competencies to show their understanding, respect and appreciation for others. These skills include self-awareness and various social competencies that enable the practitioner to listen to and validate customers which forms the basis of relationships.

Can you name any noteworthy scholars who anticipated the current economic crisis? Here’s one: Nassim Taleb, author of the fascinating ’06 book, The Black Swan. (Here’s my earlier blog entry about it.)

Taleb wrote in The Black Swan:

Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial Institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks – when one fails, they all fall.

The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur ….I shiver at the thought.

In 2006, Taleb noticed a pattern that others missed. How did he do that?

Martin defines integrative thinking as the ability to deal with the tensions of competing solutions to a problem. Instead of choosing one solution at the expense of the other, the practioner generates a solution integrates both solutions.

In his ’07 book, The Opposable Mind, Martin argues that integrative thinking is superior to conventional thinking which consists of “accpeting unattractive and unpleasant tradeoffs”.

This concept is relevant to how government and business leaders ought to approach the financial crisis. Instead of deciding between implementing tax cuts or a stimulus package – seemingly contradictory models – why not try both? Instead of businesses merely cutting operating costs, why not implement initatives that preserve high margin business increase customer retention and profit per customer.

Martin considers these issues in an October 8 interview. He applies integrative thinking to the vexing challenges associated with the economic crisis affecting today’s leaders.

Despite the shaky underpinnings and dire economic climate, the U.S. still ranks ahead of the other nations in competitiveness, though economists see thorny challenges ahead. On the plus side, the U.S. still brings a lot in the area of production potential, well-functioning labor markets, sophisticated businesses, academic leadership and technological innovation.

While these are sustainable virtues, the U.S. has its work cut out to stay on top as other countries take steps to improve their competitiveness (see Fareed Zakaria’s seminal The Post American World). Globalization is leading to the “Rise of the Rest”. This pattern has been evident to anyone involved in business dealings across markets over the last decade.

The report had few surprises. A notable exception is that the UK slipped (from 9th last year to 12th) due to its heavy reliance on a flagging financial services sector.

Singapore, the Scandinavian nations and Switzerland have been perennial leaders for several years. And it isn’t surprising that the Gulf nations are on the rise due to worldwide demand for hydrocarbons coupled with concerted economic reforms.

Fiinally, some sub-Saharan nations are making headway though, as a region, it still lags behind. These economies have had 5-6% annual growth rates and relatively low inflation in recent years. But their infrastrusctures are fragile and they may be hit hard by a global slowdown.

The WEF report is a lagging indicator of the strengths and weaknesses of global economies. For example, it doesn’t take into account the prospects of a global slowdown which reduces the demand for resources.

The take away is that governments play a substantial role in shaping a nation’s long-term capacity to compete in an increasingly global and crowded world. Good governance rules.

Now I really like Taleb’s work, and this book is a fascinating look at the world of unpredictable events. Taleb is an mathematician who explains why such events are impossible to predict. But Anderson tells it better than I could, and I’m sharing:

Four hundred years ago, Francis Bacon warned that our minds are wired to deceive us. “Beware the fallacies into which undisciplined thinkers most easily fall–they are the real distorting prisms of human nature.” Chief among them: “Assuming more order than exists in chaotic nature.” Now consider the typical stock market report: “Today investors bid shares down out of concern over Iranian oil production.” Sigh. We’re still doing it.

Our brains are wired for narrative, not statistical uncertainty. And so we tell ourselves simple stories to explain complex thing we don’t–and, most importantly, can’t–know. The truth is that we have no idea why stock markets go up or down on any given day, and whatever reason we give is sure to be grossly simplified, if not flat out wrong.

Nassim Nicholas Taleb first made this argument in Fooled by Randomness, an engaging look at the history and reasons for our predilection for self-deception when it comes to statistics. Now, in The Black Swan: the Impact of the Highly Improbable, he focuses on that most dismal of sciences, predicting the future. Forecasting is not just at the heart of Wall Street, but it’s something each of us does every time we make an insurance payment or strap on a seat belt.

The problem, Nassim explains, is that we place too much weight on the odds that past events will repeat (diligently trying to follow the path of the “millionaire next door,” when unrepeatable chance is a better explanation). Instead, the really important events are rare and unpredictable. He calls them Black Swans, which is a reference to a 17th century philosophical thought experiment. In Europe all anyone had ever seen were white swans; indeed, “all swans are white” had long been used as the standard example of a scientific truth. So what was the chance of seeing a black one? Impossible to calculate, or at least they were until 1697, when explorers found Cygnus atratus in Australia.

Nassim argues that most of the really big events in our world are rare and unpredictable, and thus trying to extract generalizable stories to explain them may be emotionally satisfying, but it’s practically useless. September 11th is one such example, and stock market crashes are another. Or, as he puts it, “History does not crawl, it jumps.” Our assumptions grow out of the bell-curve predictability of what he calls “Mediocristan,” while our world is really shaped by the wild powerlaw swings of “Extremistan.”

In full disclosure, I’m a long admirer of Taleb’s work and a few of my comments on drafts found their way into the book. I, too, look at the world through the powerlaw lens, and I too find that it reveals how many of our assumptions are wrong. But Taleb takes this to a new level with a delightful romp through history, economics, and the frailties of human nature.

Elite service companies are tapping their growing pools of data to make better decisions. Market leading businesses focus on collecting the right information and interpreting it for improving their internal process and for engaging their customers. Leveraging the emerging discipline of analytics, or expertly managing and interpreting business information, gives companies a decisive edge.

It seems axiomatic. The more a company knows about the people it wants to serve, the better able it is to create offerings they prefer, to develop targeted messages, and to extract more value across the customer experience.

This Spring, my company launched Value-based Analytics, a model for measuring what your most valuable customers need and want (“value drivers”), and the ways that client’s services meet and don’t meet those drivers.

Many companies are adrift in a sea of numbers. But for those with a clear understanding of how quality business intelligence can be used to make sound decisions, these really are the halcyon days of analytics.

It is increasingly feasible for enterprises to tap information to handle more granular segmentation, low-cost experimentation, and customization. Data mining and speech analytics tools are increasingly affordable and are leveling the playing field, even for mid-range players. The quality and availability of information are both rising while the costs of managing information are falling.

Many service firms that collect information obsessively are paralyzed by the reams of data. Choosing the right information to extract and interpreting it accurately require focus and fine-tuning. Like any other enterprise capability, analytics ought to be tied to business strategy.

Before jumping into the deep end of the pool, there’s a caveat. Building analytical capabilities across the enterprise often challenges the orthodoxy. Shifting to a more analytical approach upends legacy systems and undermines the status quo. Information is power and, naturally, some managers see a full-scale analytics initiative as threatening.

Transforming the company’s analytical capabilities is always an exercise in change management. Firms that rely on expert analytics — tools and mindset — to make better decisions stand to gain a valuable competitive advantage at a time that such advantages are increasingly harder to come by.

Parag Khanna’s new book, The Second World: Empires and Influence in the New Global Order (Random House, 2008), makes a case for understanding the world from the standpoint of Second World countries—those between modern, highly developed economies, and those in the underdeveloped Third World. Second World countries, including Russia, Turkey, Indonesia and Brazil, among others, are increasingly using their resources to exert influence in a new world order.

“Right now,” Khanna notes, “from the Middle East to Southeast Asia, the hero of the second world — including its democracies — is Lee Kuan Yew of Singapore.” His point is that, contrary to poular belief, Second World countries are not ideologically-driven, as much as driven by their desires to advance their economic self-interests. Seeing the world from their perspective is helpful to operating more effectively in a multi-polar 21st century.

The Europeans, whom he classifies as a Superpower (with no apologies to conservative Robert Kagan), assume a more expedient stance when it comes to dealing with the Second World. As a result, they’re getting more traction in those markets.

Khanna’s take will stir controversy. But, at the very least, it’s helpful to view the world from others’ perspectives in order to understand the forces that are redefining the world.

Khanna’s book is a companion to Fareed Zakaria’sThe Post American World mentioned in an earlier post. Both books describe the profound implications of operating in an increasingly muti-polar world consisting of new relationships and sources of power. Individuals interested in doing business of any kind on a global stage can benefit from seeing the world through the prism of the other players.

In his compelling new book, “The Post-American World,” Newsweek Int’l’s Fareed Zakaria reframes the challenges and opportunities of a new world order. Zakaria argues that we’ve entered a “post-American” era in which the role of the U.S. will be diminished but not irrelevant.

While the U.S. still possesses unique, natural advantages, “the rise of the rest,” including China, India and Brazil, among others, are creating a world through their economic growth that is more multi-focal. Other nations are now catching up to America’s level of economic clout and self-assertion. What’s next for the U.S. in this new world order remains to be seen.

Zakaria argues that America has assumed that its innate strengths — academic resources, free markets and diversity of talent — can compensate for its anemic savings rate or the absence of a health care system or a cogent, long-term economic strategy.

“That was fine in a world when a lot of other countries were not performing,” argues Zakaria, but now the best of the rest are working hard, saving well and are looking ahead. “They have adopted our lessons and are playing our game”. He worries that “the U.S. risks having its unique and advantageous position in the world erode as other countries rise.”

According to Zakaria, the U.S. still has significant natural advantages. But the new worry for America is neither the rise of other societies, nor its own diminsihing influence, but Washington’s politics of stagnation and partisanship in recent years. Zakaria argues that anachronistic systems of government hijacked by vested interests are having a drag on the agility and innovativeness that led to America’s rise in the last century. As David Singh Grewal notes in his new book, Network Power, “Everything is being globalized except politics.”

Zakaria makes his case skillfully. His argument should inspire a broader conversation during this election cycle about how to shift attention to the new challenges and opportunities of a multi-focal world. Rather than engage in the same tired debate about restoring America’s lustre, it makes sense to weigh the options as seen through the prism of a post-American world.

There’s a lot of talk around about how the “flattening” of the marketplace is slowing, or that it’s been overstated. But globalization, like most market forces, occurs in successive approximations. It’s sluggish in over-regulated markets while it accelerates in open markets. But it’s certainly happening–the evidence seems overwhelming.

Competitiveness will be further reinforced by collaboration-enabling tools including social media. Meanwhile, a critical mass of worldwide governments is creating conditions for even greater competition and openness which will drive even more cross-border collaboration.

History has shown that some markets will lag while others quicken their pace. It’s critical to understand how factors “on the ground” affect globalization.

Among other things, Davenport notices that today’s most most pressing themes are globalization, motivation and innovation. He also observes that traditional business gurus writing “weighty tomes” are giving way to thought leaders from fields like psychology, journalism and experienced C-suite executives.

He’s so right about this. Traditional business writing doesn’t address the complex forces driving the marketplace these days.

Smart, creative practitioners are continuously looking for new insights which they can use to solve their most pressing challenges–especially challenges concerning collaborating with peers and partners alike to solve pressing challenges across time and space.

I agree with some of Davenport’s picks, but most especially top-ranked guru, Gary Hamel, who has written one of the most compelling business books around, The Future of Management (’07), and one that is inspiring a new way to think about organizational management. While Hamel’s academic credentials may place him in the “traditional” category of thinkers, his work is revolutionary.

Hamel writes, “You can’t shuffle your way to the next S-curve. You have to leap. You have to vault over your preconceived notions, over everyone else’s best practices, over the advice of all the experts, and over your doubts….[You] don’t have to leap with hundreds of millions of dollars on the line, or with your career dangling precariously out of your pocket. You don’t have to leap with no sense of where you’re going to land. But you do have to leap—at least with your imagination.”

Hamel’s approach is ideally suited for an emerging business gestalt in a world that moves faster every day. His work is emblematic of why we’re increasingly looking outside traditional business management for creative ways to solve problems. His work validates the notion of looking outside the box for novel yet practical ways of solving problems.